ProBiora3
BackgroundProBiora3® is a proprietary blend of three naturally occurring strains of beneficial bacteria, including Streptococcus oralis, Streptococcus uberis, and Streptococcus rattus, which promote fresher breath, whiter teeth, and support overall oral health. We believe that ProBiora3 is the most comprehensive oral probiotic technology currently available in the oral care market. The scientific basis for the oral health and cosmetic benefits provided by these three strains of bacteria has been documented in numerous peer-reviewed publications over the past 30 years. We promote ProBiora3 as the active ingredient in our over-the-counter consumer branded products, including EvoraPlus®, EvoraKids®, Teddy’s Pride® and EvoraPro®. EvoraPlus and EvoraKids are flavored probiotic tablets intended for twice-daily use by adults and children, respectively, after brushing their teeth. Teddy’s Pride is intended for companion pets such as cats and dogs, and comes in powder form, which is odorless and tasteless. The powder is intended to be sprinkled on a pet’s food once per day. EvoraPro is a professional strength product designed for the dental office channel. In addition to our house-branded products, we also market ProBiora3 as an active ingredient for private label products, as well as in bulk for licensing applications.Market OpportunityProbiotics are live microorganisms that confer a health benefit to their host when administered in sufficient amounts. The beneficial bacteria in a probiotic formulation help to maintain a healthy balance with bacteria in the body. Examples of common probiotic applications are yogurt containing live cultures, acidophilus capsules to improve digestion, and products for improved immune system and vaginal and urinary tract health. According to MarketsandMarkets, the global probiotics market is expected to reach $32.6 billion by 2014, representing a CAGR of 12.6% from 2009 to 2014. Probiotics products are relatively more common in Asia and Europe, with Europe accounting for nearly 42% and Asia accounting for 30% of the global market. The probiotics market in the United States, however, is emerging, and products that address gastrointestinal problems and other uses are rapidly becoming available, especially as dietary supplements and cultured foods and beverages. The Probiotic Foods & Beverages category currently represents over 75% of the overall probiotics market in the United States.
Our SolutionProBiora3 is a blend of three naturally occurring strains of bacteria for use in the promotion of oral health, including Streptococcus oralis strain KJ3™, or S. oralis ; Streptococcus uberis strain KJ2™, or S. uberis ; and Streptococcus rattus strain JH145™, or S. rattus . In a healthy human oral cavity, S. oralis and S. uberis are commonly found in significant amounts, and conversely, the levels of bacteria associated with periodontal disease are usually quite low. The opposite situation prevails in periodontal disease sites, at which the beneficial bacteria S. oralis and S. uberis are usually undetectable. Our scientists have demonstrated that S. oralis and S. uberis produce hydrogen peroxide, which interferes with the growth of certain potentially harmful periodontal bacteria, and also gently and naturally whitens teeth. The third bacterial strain in our ProBiora3 blend, S. rattus, is able to establish and maintain a healthy balance of bacteria on the tooth surfaces by competing with certain other potentially harmful bacteria associated with tooth decay.ProBiora3 has been extensively tested for safety and efficacy in the laboratory and in animal and human trials. In our pilot human study, a twice-daily administration of ProBiora3 was well tolerated by subjects and no safety issues were observed. ProBiora3 produced substantial decreases in the numbers of key potentially pathogenic bacteria associated with tooth decay and periodontal disease in young healthy adults. We market products containing ProBiora3 under our own house brand names, and have branded ProBiora3 as an active ingredient for licensing and private labeling. Our house brand products contain different ratios, or blends, of the three natural strains contained in ProBiora3, which vary depending on the intended use of the product. Our ProBiora3 products are designed for repetitive use in order to achieve the intended benefits, which we believe provides us with the potential for recurring revenues as consumers who continue to seek the benefits of our products will continue to make purchases. Our ProBiora3 products include: EvoraPlus: a product with equal weight of all three strains that is optimally designed for the general consumer market. EvoraPlus is a mint-flavored probiotic tablet packaged in a 60-unit box with four 15-dose blister packs, representing a one-month supply. The intended use for EvoraPlus is for consumers to take one tablet twice per day after brushing their teeth. EvoraPlus was initially launched in December 2008, but distribution was limited to sales through our own website. In March 2010, we obtained national distribution for EvoraPlus in the domestic mass retail channel with the addition of Walgreens as a vendor. We have continued to expand our distribution in the domestic mass retail channel, and we believe that EvoraPlus is currently available for stocking at over 17,000 retail stores. The manufacturer’s suggested retail price, or MSRP, for EvoraPlus is $19.95 per box. EvoraKids: a product that has higher levels of S. rattus, which addresses dental health, but reduced levels of S. oralis and S. uberis since periodontal disease is not typically a pediatric concern. EvoraKids is a fruit-flavored probiotic tablet packaged in a 60-unit box with four 15-dose blister packs, representing a one-month supply. The intended use for EvoraKids is for consumers to take one tablet twice per day after brushing their teeth. We launched distribution of EvoraKids in January 2010 with an MSRP of $19.95 per box. Teddy’s Pride: a product that has higher levels of S. oralis and S. uberis, which address tooth staining and breath problems common to dogs and cats, but reduced levels of S. rattus since tooth decay is not typically a concern in companion pets. Teddy’s Pride comes in powder form, which is odorless and tasteless. The powder is intended to be sprinkled on a pet’s food once per day. It is sold in a jar containing a measuring scoop that provides the recommended dosage per application, representing a two-month supply. We launched Teddy’s Pride in October 2009 with an MSRP of $24.95 per jar. EvoraPro: a professional strength version of EvoraPlus that is designed for the dental office channel. EvoraPro is packaged as a ten-dose blister pack and is shrink-wrapped with one box of EvoraPlus. The intended use for EvoraPro is to take one tablet per day for ten days after a routine dental cleaning. EvoraPro can only be purchased from a professional dental office. EvoraPro was launched in early August 2010 with an MSRP of $29.95 per pack. Our Regulatory StrategyWe market ProBiora3 as a food ingredient utilizing self-affirmed Generally Recognized as Safe, or GRAS, status. GRAS is available for food products that are generally recognized as being safe for human use and do not claim to treat, prevent, or cure a disease. Furthermore, food products that make only cosmetic or structure-function claims are typically able to enter the market through what is known as self-affirmed GRAS status, which designates that we have performed all necessary research, including the formation of an expert panel to review safety concerns, and are prepared to use these findings to defend ProBiora3’s self-affirmed GRAS status. In 2008, we convened a panel, the members of which we believed to be qualified as experts by their scientific training and professional experience, to analyze and evaluate the safety data for ProBiora3. After review, the panel concluded that the safety data of ProBiora3 was sufficient to support our claim to self-affirmed GRAS status for human consumption. The same data dossier could be applied to support the safety for companion pet consumption of ProBiora3.Our marketing for ProBiora3 includes the cosmetic claims of teeth whitening and breath freshening, along with the general structure-function claim that ProBiora3 supports oral health. Regulations vary in markets outside the United States and it may be possible to assert other benefits including health and disease prevention claims associated with probiotic use, especially after independent clinical studies have been completed and appropriate regulatory fillings are approved. At present, we are aware of several independent academic studies that have been initiated on a variety of potential health and cosmetic benefits associated with ProBiora3 probiotic use by humans. Sales, Marketing and DistributionAll of our house-branded ProBiora3 products have been launched and are available through various distribution channels. We have selected our distribution channels by focusing on our potential channel impact, as well as potential return on marketing expenditures. Mass Retail: The mass retail channel encompasses several sub-channels including large national retail stores, mass drugstore chains, independent drugstores, and grocery stores. In order to develop and manage this channel, we retained a team of independent manufacturers’ representatives with industry expertise and strong relationships with the buyers for many of the large national mass retailers. We worked with this team to identify the mass drugstore channel as the lead sub-channel in the overall mass retail channel. Mass drugstores are typically the first to adopt a new wellness-related product or technology, and once mass drugstores adopt such a product, other sub-channels typically follow. In March 2010 we received an initial order from Walgreens for EvoraPlus, and in April 2010, we received an initial order from Rite Aid for EvoraPlus. Both Walgreens and Rite Aid received delivery for initial stocking of EvoraPlus during the second quarter of 2010. In addition to these mass drugstore chains, we have received orders for EvoraPlus from a number of larger national and regional mass retailers, including A&P Supermarkets, Pathmark, Albertsons Supermarkets, Sweetbay Supermarkets, and Hannaford Supermarkets, among others. Direct-to-Consumer: The direct-to-consumer channel encompasses four sub-channels, including (i) Internet sales through our own websites; (ii) direct mail; (iii) direct-response television, or DRTV, which is usually initiated through an infomercial; and (iv) electronic-response television, or ERTV, which entails marketing through television shopping networks such as Home Shopping Network and QVC. i. Internet sales: We currently operate two websites through which we market our products directly, and we have incorporated an ‘Oragenics Store’ into our corporate website. We also intend to develop an affiliate marketing program whereby we will pay external website operators click-through revenues when a customer visits our websites via an affiliate site and subsequently makes a purchase. ii. Direct mail: We are currently in discussions with one of the largest direct mailers of nutraceutical products in the United States, although we may also initiate our own direct mail campaign. iii. DRTV: We have developed a two-minute spot infomercial that we expect to test on select networks and in select markets. The infomercial has been designed to promote a direct response from viewers, as well as to drive traffic to the mass retail channel. If tests prove successful and we are able to forecast a positive return on our marketing spend, we will expand the geographic area and broadcasting frequency of the infomercial. We have also been in discussions with a number of companies that specialize in DRTV advertising. iv. ERTV: We have been in discussions with both of the major domestic ERTV operators as well as companies that have established brands on their respective channels. We anticipate consummating one or more ERTV marketing opportunities by the end of 2010. Professional Offices: The professional offices channel encompasses several sub-channels, including (i) the dental professional channel, which includes dentists, orthodontists and dental hygienists; (ii) the veterinarian professional channel; and (iii) the alternative medicine professional channel, which includes chiropractors, massage therapists and occupational therapists, among others. In August 2010, we launched EvoraPro, which is a product exclusively for the dental professional sub-channel. EvoraPro is an extra-strength, probiotic mint that comes in a 10-unit box designed to be taken after dental cleaning or treatment. It is coupled with a box of EvoraPlus to be used once the EvoraPro has been exhausted. We have also established an affiliate marketing program through which dental professionals can earn recurring revenues from their patients’ subsequent purchases of EvoraPlus. If successful, we intend on following a similar plan to penetrate the other sub-channels in the professional offices channel. Private Label: The private label channel encompasses arrangements whereby we or third-party manufacturers market our products for resale under a third-party’s brand name. We typically establish private labeling arrangements in order to leverage an existing company’s brand equity and distribution channels. The first major private labeling agreement we consummated was with Garden of Life, which is a leading U.S. nutritional supplement products brand. Garden of Life has contracted to sell our EvoraPlus product under the brand name Probiotic Smile. Garden of Life sells exclusively in the health food channel, which includes many stores geographically disbursed around the United States. Another notable private labeling sub-channel is the multi-level marketing, or MLM, channel. We have been in discussions with a number of large MLM companies regarding private labeling opportunities for our products. International: Europe and Asia account for more than 70% of the global probiotic market. Since the launch of our first product, EvoraPlus, we have received substantial interest from the international community, and we have therefore initiated relationships with partners to distribute our products worldwide. To date, we have executed a number of distributorship agreements, including agreements with RicciPharma and Celgen. The international distributorship agreements we have entered into to date typically require that the distributors provide upfront payment to us either by irrevocable letters of credit or wire transfers prior to our initiating production and as a result, we believe that we do not bear any credit risk with such agreements. We also require distributors to take possession of product at our manufacturing facility, which substantially reduces our inventory risk. Licensing/Bulk: The licensing/bulk channel encompasses the incorporation of ProBiora3 as an active ingredient into existing branded products. We have been in discussions with a number of companies regarding the licensing or bulk sale of ProBiora3. ManufacturingWhen produced, ProBiora3 comes in powder form. ProBiora3 is manufactured by separate fermentation of each of the three strains. The cells are recovered by centrifugation or filtration and freeze dried. Experimentally determined amounts of the resulting powders are blended with natural bulking agents to deliver the proper number of viable cells of each strain per dose. ProBiora3 for human use may be incorporated into various delivery vehicles; for example, in the case of EvoraPlus and EvoraKids, flavoring agents are added and the powder is pressed into tablets, which are sealed in blister packs. In the case of Teddy’s Pride, the powder is not flavored and is simply added in bulk to a plastic container. Freeze-dried cells in ProBiora3-containing products are stable for up to 18 months after manufacture when kept in cool, dry conditions. The cells are revitalized when they come in contact with moisture, for example the saliva present in the oral cavity.We have contracted with multiple manufacturers to: (i) produce our active ingredient, ProBiora3, (ii) blend and tablet EvoraPlus, EvoraKids, Teddy’s Pride and EvoraPro, and (iii) package our products. Each of our contract manufacturers has the ability to scale production as needed. With each manufacturer, we place orders for components or finished product to be produced for a fixed fee which we are expected to pay upon completion of the manufacturing process. Packaged probiotics products are shipped to us or to a destination specified by us, which is a central distribution center in the case of a mass retail customer or a private label distributor. We currently maintain an inventory of our products for Internet sales and other sales to distributors. We believe our arrangements with our contract manufacturers are satisfactory to meet our current and expected future needs. We have qualified and used at least two contract manufacturers for each step in our manufacturing process, although we do not have a long-term supply agreement or commitment with any of our manufacturers. |
ProBiora3®. The first all-natural probiotic blend for oral care.
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